Yen declines to two-week low as safety bid wanes

The yen fell to a two-week low against the dollar before U.S. reports that economists said will show consumer sentiment improved and business activity expanded, damping demand for the relative safety of Japan’s currency.

The yen dropped versus most of its major peers as Asian shares from Japan to China rallied after Federal Reserve officials sought to reassure investors they will keep providing stimulus to the world’s biggest economy. German retail sales increased more than economists forecast. South Africa’s rand fell as the central bank said the economic outlook was hampered by weakened consumer and investor confidence. India’s rupee gained.

“It’s risk-on,” Geoffrey Yu, a senior currency strategist at UBS AG in London, said in a telephone interview of the yen’s depreciation. “Clearly, it’s being led by Asian markets overnight, finally starting to perform.”

The yen fell 0.8% to 99.16 per dollar at 10:13 a.m. in New York after sliding to the weakest since June 10. Japan’s currency weakened 0.7% to 129.10 per euro after dropping 0.8% yesterday. The euro lost 0.1% to $1.3020.

The yen has gained 1.3% to the greenback this month, while Australia’s dollar has declined 4.4%. This quarter, the euro has led all major gainers with a 1.5% increase, while the worst-performing Aussie has slipped 12.2%. The greenback is the best-performing currency in 2013 and South Africa’s rand has plunged 15.4%.

India’s currency gained the most in nine months as investors reassessed projections for a reduction in U.S. stimulus. The rupee surged as much as 1.7%, the most since Sept. 21, before trading at 59.39 per dollar. That pared its drop this year to 7.4%.

The rand fell versus all except three of its 16 major peers as the South African Reserve Bank lowered its forecast for growth this year to 2.4% from 2.7%.

“The economy is facing a difficult time as it is buffeted by both global and domestic challenges,” the central bank said in its annual report released today in Pretoria. “The outlook is poor following the 0.9% annualized growth rate in the first quarter.”

The rand weakened 0.7% to 10.0125 per dollar, pushing its decline this quarter to 8.7%.